COMMISSIONER OF INCOME TAX VS CHOHAN FLYING COACH SERVICES, 2002 PTD-LAHORE-HIGH-COURT-LAHORE 951 (2001)

(a) Income Tax Ordinance (XXXI of 1979)---

----Ss. 65 & 136(1)---Qanun-e-Shahadat (10 of 1984), Arts. 2(8) & 92-- Additional assessment ---Assessee was deriving income from plying a number of vehicles for hire---Assessing Officer re-opened their case and framed additional assessment after receiving information from Department of Excise and Taxation that assessee had got 6 (six) vehicles registered in their names since 1989---First Appellate Authority allowed partial relief by way of reducing the income so computed---Tribunal found that Assessing Officer without any definite information had proceeded under S.65 of the Ordinance; and that assessment re-framed was mere a change of opinion---Validity---Law did not permit re-opening of assessments on doubts and suspicion---Information received by Assessing Officer was based upon record maintained by the Excise and Taxation Department which was performing its duties assigned to it under law---Such information could not be said to be "suspicious" or .uncertain "---Presumption of correctness was attached to such record, though assessee could controvert the same with evidence---Such record being uncontroverted was certainly a piece of evidence, which could be treated as definite information for purposes of S.65 of the Ordinance-- Information based upon record maintained by an official agency was certain and did not need any further evidence to crystallize the same-- All the attributes of a definite information being available in such information, Assessing Officer had rightly proceeded to re-open the assessments already framed---View adopted by Tribunal, held, was not correct.

(b) Income Tax Ordinance (XXXI of 1979)--

----S.65(2)---"Definite information"---Test to determine definite nature of information---Requirements of S.63 of the Income Tax Ordinance, 1979.

The phrase "definite information" refers to the information, which is sine qua non for the purpose of re-opening. That information per se may not be the reason on which any further liability is placed upon an assessee. However, that information could be a good basis to confront the assessee and in case no rebuttal is brought home, it can very well be a basis for enhancement of tax liability. The, requirement of provisions of section 65 of the Income Tax Ordinance, 1979 as to information is that it should be of such a nature to create reasonable belief in the mind of the Assessing Officer that things do exist in a particular form, which were either concealed by the assessee or were otherwise had to be brought to the knowledge of the Revenue for the purposes of making a complete disclosure of the income earned during a specific period.

One simple test, if the information in the hand of the Revenue is definite is, to see if finally it could be made the basis for enhancement; of the tax liability of the assessee. Obviously after having been confronted by the Revenue, if the information remains uncontroverted; it does provide a basis for computation of income of the assessee from a particular source. Then it is certainly definite in nature and answer of the requirements of provisions of section 65 of the Income Tax Ordinance, 1979.

Muhammad Ilyas Khan for Petitioner.

ORDER

NASEEM SIKANDAR, J.---This is a case stated by the Lahore. Bench of the Income-tax Appellate Tribunal framing following questions

which are stated to have arisen out of their order recorded on 10-1-1996 on the cross-appeals of the assessee as well as the Revenue:---

(i) Whether on facts and circumstances of the case, the information received from the Excise and Taxation Officer on 20-9-1993 showing Messrs Chohan Flying Coach Services; Sahiwal it s the owner of six passenger motor-vehicles can be rightly treated as definite information within the meaning of subsection (2) of section 65 of the Income Tax Ordinance, 1979?

(ii) Whether on facts and circumstances of the case the Assessing Officer rightly issued on 14-2-1995 notice under section 65 of the Income lax Ordinance 1979 to the respondent-assesse?

(iii) Whether on fact circumstances of the case the learned Appellate Tribunal is right in holding that the Assessing Authority assumed jurisdiction under section 65 of the Ordinance, unlawfully?

(iv) Whether, on facts and circumstances of the case, the learned Tribunal has rightly annulled the additional assessment under section 65 of the Income Tax Ordinance, 1979 made on the respondent firm

2. According to the statement of the case; the assessee derives income from plying for hire a number of vehicles. On 20-9-1993, the Assessing Officer received an information from the Department of Excise and Taxation that Messrs Muhammad Jamil and Liaqat Ali proprietors of Messrs Chohan Flying Coach Services had got six vehicles registered in their names since 1989. The Assessing Officer finding that they had not shown any income in all the years under consideration i.e. 1989-90 to 1993 94 proceeded to re-open the assessments already framed. On usual proceedings he concluded that there had been escapement of income, and therefore, proceeded to frame additional assessments by resort to the provisions contained in section 65 of the Income Tax Ordinance, 1979.

3. The learned First Appellate Authority allowed partial, relief only by way of reducing the income so computed. On further appeal. however, the Tribunal was of the view that the Assessing Officer proceeded under section 65 without any definite information and that the assessment framed after re-opening were a case of mere change of opinion. In the view of the learned Members it was established that there was no definite information before the Assessing Officer while initiating re-assessment proceedings. Thereafter, at the request of the Revenue, the aforesaid questions were framed for our consideration and reply.

4. After hearing the learned counsel for the Revenue, as far' Question No.1 is concerned, we will readily agree with him that the view the Tribunal is not correct. The Assessing Officer proceeded to reopen t case after having received information from the aforesaid Government Department. That information was based upon the record maintained by the Department in the performance of its duties assigned to it under law. To that record a presumption of correctness is attached though the assessee could always come up with an evidence to controvert the same. However, as long it remained uncontroverted, it was certainly a piece of evidence which could be treated as definite information for the purposes of provisions of section 65 of the Income Tax Ordinance, 1979.

An information based upon the record maintained by an official agency is certain and does not need any further evidence to crystallize it. Therefore, it fulfills all the requirements of being definite information as contemplated in section 65 of the Income Tax Ordinance.

5. The learned Tribunal without dilating upon the nature of the, record and the information based thereupon proceed to find against the Revenue by using general remarks. It was absolutely unwarranted. It is correct that law prohibits re-opening of assessments on doubts and suspicions as stated in the impugned order of the Tribunal. However, the information provided by a Government Department which is duly supported by the record maintained by them in the discharge of their legal functions cannot be said to be "suspicious" or "uncertain": As said above all the attributes of a definite information being available in such information, the Assessing Officer rightly proceeded to re-open the assessments already framed. We would like to observe that the phrase definite information refers to the information which is sine qua non for the purpose of re-opening. That information per se may not be the reason on which any further tax liability is placed upon an assessee. However, that information could he a good basis to confront the assessee and in case no rebuttal is brought home, it can very well be a basis for enhancement of tax liability. The requirement of provisions of section 65 as to information is that it should be of such a nature to create a l reasonable belief in the mind of the Assessing Officer that things do exist in a particular form which were either concealed by the assessee or were otherwise had to be brought to the knowledge of the Revenue for the purposes of making a complete disclosure of the income earned during a B specific period 6. One simple test, if the information, in the hands of the Revenue is definite, is to see if finally it could be made the basis for enhancement of the tax liability of the assessee. Obviously after having been confronted by the Revenue if the information remains uncontroverted, it does provide a basis for computation of income of the assessee from a particular source. Then it is certainly definite in nature and answers of the requirements of provisions of section 65 of the Income Tax Ordinance, 1979.

7. That being so, our answer to the first question is in the affirmative that the information received from the Excise and Taxation Officer on 20-9-1993 showing the assessee. to be the owner of six passenger motor-vehicles could be treated as definite information, within the meaning of subsection. (2) of section 65 . of the Income Tax Ordinance, 1979.

8. As far the other three questions, we are of the view that these are only consequential to the first question, and therefore, these also stand answered in the light of our opinion expressed with regard to Question No. 1.

9. Answered accordingly.

S.A.K./C-143/LReference answered.